I am talking about being forced, literally, into involuntary servitude, complete with being told where you will be, when, what you will do at all times until you are manumitted–which could, theoretically, be your seventieth birthday if you annoyed the wrong overseer–what you will wear, when you may speak and what you may say, lockdowns, and restrictions on to whom you can talk and what you can read in some instances on pains of large, capricious fines and jail sentences.

I’m bound to have been busted by at least one of you. Yeah, I got a summons to be a juror and have been informed that if I am not there on the dot of 1:15 p.m. on March 16th I can be fined a thousand dollars–presumably a day–until I am in the appointed place at the appointed hour, properly contrite, wearing clothing “reasonably befitting the dignity and solemnity of the court proceedings.” Word of a Traynham, that is a direct quote. One immediate thought was of Charles Rangel, who is always impeccably and expensively garbed, something which is a great deal easier to do when one is on the take and does not pay taxes, no doubt. Perhaps Barney Frank or Nancy Pelosi should be taken as examples of the connection between civic duty and haberdashery?

My next thought on mandatory duty uniforms/sartorial standards was that I lead a very quiet country life, these days. On my rare trips to town I am usually upholstered in a good velour “jogging outfit” by someone like DKNY (That being cutting edge around here for having “dressed” for those who do not wear suits to their offices. Garb most places runs to tee shirts, shorts, and flip-flops.) I’ve got my Madame DeFarge get-ups/widow’s weeds, if a black tunic and silky slacks are befitting the dignity of County Court at Law 2. Finally, for this time of year there is my “spring and summer weddings suit,” a symphony of peach, cream, and brown…but entirely too dressy for other daytime events, and it is “ladylike and traditional” but not “solemn.”

What does the well-dressed juror wear, and how many different outfits are sufficient to maintain the dignity of the court, given that we have no idea how long the trial will last? Is it contempt of court to wear the same thing throughout a trial? Are we supposed to go shopping every day after we are dismissed until nine ack emma to purchase something different until we have, say, two week’s worth of dignified, solemn outfits? Would the Judge disapprove of a nice black robe with a lace collar like Judge Judy? Almost certainly. Hmmm…I think the widow’s weeds with a seven by four foot swathe of black chiffon belly-dancing veil drapped mysteriously over my head and shoulders, go for the Indira Gandhi look? An ankle bracelet with bells would be a little over the top, as would zils (those tiny brass finger cymbols.) I could alternate with my black wool military beret with our clan badge in sterling where a military flash would go…if questioned I would reply regally, “My grandmother taught me that if you wear a hat it means you think the occasion is important.” Well, she did. It also saves time dressing one’s hair. Are young men who do not own suits obliged to buy them? Where does this stop? Are professional manicures and pedicures required? I certainly think so. A special trip to the dentist to have one’s teeth cleaned?

Now we have to get serious (while my mind mulls over the correct jewelry to look deliberately like elitist scum eager to oppress the accused to induce the Defense Attorney to issue a peremptory challenge…) It would be very easy to get out of this until May 11th, after which I am exempt by reason of age; I have a very cooperative doctor. Nyah, that’s too simple. What’s the old joke? “Do you want to be judged by a group too dumb to get out of jury duty?” Sprezzatura. Being dressed at least one notch more formally than others is a power play that goes back to the times of nomadic tribes, but has the government the right to demand that citizens add to the panoply? Never mind that we like being the best-dressed person in a room, should Shang-Haied citizens be forced to buy “suitable” raiment to underscore the might of the judiciary?

The more I consider the outrage of the County daring to force me into slavery, the more Jeffersonian I became. I would dislike it excessively if chained to an uncomfortable chair for days on end without my iced tea and ash tray, unable to use a restroom when I wished, threatened with jail and fines if I spoke, and thinking of deep vein thrombosis. It would upset my elderly rescue dog, too, having her beloved Mama gone.

I neither know nor care what they pay for jury duty and would not accept it; my mind and my body are not for sale, and neither is my patriotism. If necessary they will find they can command my body by charging me a thousand dollars a day for seven weeks until my birthday (plus, no doubt, assorted additional fines for contempt of court), but they can not make me tell lies and they can not force me to consider the evidence before me if I am determined not to. How ludicrous, to fine or jail me on a charge of “not thinking.” There’s a precedent we would love to see applied to Congress and government at all levels.

I am really most unsuitable for Jury duty and Sonia Sotomayor actually said something sensible. We are, indeed, the products of our upbringings and experiences. Put that way, nobody other than the other jurors, possibly, and spectators will ever want me sitting in a jury box. Particularly not if I am in a righteous rage.

1. The defendant is entitled to “a jury of his peers,” and that certainly isn’t a good description of me. Few of us are replicated under the actual meaning of that term, which is “equals.” They could probably search all of Texas and not accumulate a jury of my peers. Candidates would have to be Caucasian, Christian, widowed, and very articulate. They would be required to read Egyptian hieroglyphics, play most of Chopin well, have been elected public officials, never have had as much as a parking ticket, write regularly for national audiences, raise registered dairy goats, be experts at Free Cell, design ecclesiastical regalia, collect jade and spices, be able to make Toll House Cookies without a recipe, and possess highly reprehensible senses of humor to go with tons of ethics and principles. Darn…thought we had one in Mineral Wells, but she only had “grade” goats and had never made cheese…the lady in Dripping Springs looked good, but she didn’t score well enough on the Miller Analogy Test for graduate admission. The man in Hondo almost made it, but he can’t tailor or teach phonics…

2. I cannot, in conscience, say other than that of course I am prejudiced against that surly fellow in orange prison coveralls and shackles on trial for robbery and aggravated assault. We have to believe (against considerable historical evidence) that all Sheriffs and Police are honest, well-trained, intelligent, thorough, and confident the evidence they will present is overwhelming. I don’t care how many people assure judges that they are capable of being fair and impartial, I don’t believe it–no matter what their life experiences have been. Do consider the OJ trial. I’m an equal opportunity bigot when it comes to those accused of murder, burglary, arson, and child and animal abuse. I don’t care what age, color, or species they are when it comes to violent crime.

It will be reasonable to suppose correctly that the lowlife in front of me is a very rotten apple, even if his previous offenses and juvenile record cannot be revealed to me because his records are sealed. Forcing me to be a juror puts him under the Code Napoleon, thereby violating his civil rights, not that I suppose he deserves any if he is guilty as charged, and if that doesn’t disqualify me nothing will. His lawyer would have to convince me of his client’s innocence unless it were obvious that the elected coroner were a fool and the arresting officer a liar, which has certainly been known to happen.

3. The Defending Attorney–particularly in a criminal case–will take one look at me and my curriculum vitae and shriek a peremptory challenge, thereby wasting everyone’s time and all that effort to look exotic, but solemn, dignified, and well-manicured and jeweled. He/she won’t have any doubt that I have not even a modicum of sympathy for lawbreakers, and that is more subtle than the traditional, “Sure, I think he deserves a fair trial and then we can take the guilty s.o.b. out and hang him.” (An acquaintance made that as a joke and the court martial was thrown out.)

4. However, that isn’t going to let some Assistant DA off the hook, either. If he has much sense or experience he will look at the same life and think, “Loose cannon!” Chortle. No foolin’ buddy. I’ve spent a lifetime around “terrorist types” like career military men, chairing committees and boards and being President of things and if I can’t get myself selected as Foreman of the Jury I will be very surprised. I will make the ADA’s life a living hell–legitimately–asking questions and demanding explanations couched in plain English, even if that means sending the Jury to the Police Academy or the local cow college to take classes. In general it takes three times to convince a new doctor that we aren’t going to quit asking for explanations in ordinary language until he provides them and I am relatively certain that the Court is obliged to produce all the information or tutors a jury requests. Spontaneous laughter…perhaps I should ask for Linda Goodman’s Sun Signs. Sun Tzu on the art of war…I’m Okay, You’re Okay…to call in an expert in handwriting analysis (for character traits, not to determine if a check is a forgery.)

5. The Judge might like me, but he isn’t going to approve of me. Actually, I expect he is going to throw me out of his courtroom about fifteen seconds after I am asked if there is any reason I cannot be a fair and impartial juror, supposing I haven’t terrified one of the lawyers into excusing me. Goodness, no, I’m not going to run through items one through four.

I’m going to fling a piece of legal Kryptonite on the floor by saying that I must be assured there will be no jury nullification. At least many Judgies will flush beet red, begin banging their gavels in near apoplexy, and order the courtroom cleared and the entire jury pool dismissed because it has been “tainted.” Juries have enormous power but few jurors know that. Life is much simpler for the, um, justice system when we are ignorant.  In the classic phrase, a Grand Jury can indict a ham sandwich. This IS a serious, valid issue, and if you are going to disrupt your life for days, weeks, or months it is reasonable to expect that your verdicts will be honored.

Any jury I serve on is going to be very well-informed because I will infuriate everyone by insisting upon it.

I don’t want to hear any charges that I intend to shirk my “civic duty.” For one thing, it is my carefully-considered analytical opinion that I would make a dreadful juror, over and above falling asleep constantly because I’m a night owl who is rarely asleep before dawn and arises at the crack of noon if the matter is urgent. Imagine the poor Baliff having to nudge me awake frequently, and the Judge puzzling out whether or not my involuntary somnolance constitutes contempt of Court. (I have always wondered what would happen if someone said, “Judge, please double that fine. The one you imposed does not begin to express my contempt for this Court!” Possibly 18 months in prison and a $25,000 fine…or perhaps the Judge would prefer not to be a laughing stock nationally. I hope I have enough sense not to test the issue.)  This is a matter of my personal freedom to spend my time as I choose and not be subjected to my ideas of cruel and unusual punishment, including disturbing my sleep, refusing to allow me to smoke, threatening my vascular health, requiring total rigidity, and possibly reprimanding me for the frequent sneezing fits “dead” buildings always cause.

If I am “impressed,” like an American citizen by the British–a basic cause of the war of 1812–I will, of course, comply by showing up dressed with great formality…with a different needlework project every day to occupy my hands until the Judge says flat out that they can only remain folded in my lap, and I fire back that Miss Manners says that a lady may, with propriety, take her hand work anywhere.

If they treat me kindly I may not hang the jury. Goodness, if they can’t hang Khalid Sheik Mohammed after he confessed joyously or figure out that Nidal Hasssan was a terrorist, how can any DA hope to convince me beyond any doubt one way or the other? Malice? Heaven forfend! I would be surprised if it were not possible in any trial to find a rationale for voting for the outcome most likely to annoy big government. This is a matter of principle, that we must guard our freedoms zealously. Dr. Peter Haynes of the University of Hawaii’s Philosophy Department smiled approvingly when I embroidered or knitted in his classes rather than scribbling notes frantically…and I don’t think the current jury protocols even allow us to play cat’s cradle or paint our nails, far less do anything productive. Laughter…all right, I admit it: a major issue here is that I cannot abide just sitting and listening/watching. I read in my bath and while cooking and play computer games when on the telephone.

It is my opinion that government has no right to demand my compliance in the ways enumerated. If they want to compromise and give me a comfortable chair, freedom to walk     around, an ash tray, a glass of wine and hors d’oeuvres at five, my lap top, possibly a jigsaw puzzle, and valet parking they may borrow my admittedly prejudiced mind between the hours of four p.m. and ten p.m., good dinners catered, since I am quite capable of attending to legalese and eating simultaneously.

They can broadcast the (archived) proceedings and I will watch on my laptop and send in my opinion. I think better between dark and dawn than I do before noon.

What they cannot do is seize my body, stuff it in a sealed building full of allergens, deny me my ubiquitous glass of iced tea while the Judge and the lawyers have glasses of water, and tell me I must sit there without moving or speaking, as though I were a child in Kindergarten, in defiance of several items on the Bill of Rights.

At least, they can’t do it without suffering the wrath of a very fertile, very determined mind.

The better part of valor would have been not publishing this article, lest the local Jury Coordinator and Judge take offense, since we all know they can make my life miserable. Somebody bail me out if I get thrown in the clink, please. Delighted laughter…my darling Charles would surely take my side (right or wrong) and end up in jail with me.

This is both funny and serious, and my idea of civic duty is standing up for the rights of the law-abiding amongst us, not coddling criminals by demanding complete rigidity and abuse of the citizenry.  I won’t make a good automaton. Any mother of three can be an Air Traffic Controller while dispensing the high, the middle, and the low justice to her brood and making potato salad. Put that way, yes, I am quite capable of rendering judgement on someone’s behavior even if my idea of a good punishment for children is reading Bill Bennett’s complete Book of Virtues and that Sheriff Joe Arpaio tends to be a little solicitous of the comfort of his prisoners.

Judge Whatsis and the Brazos County District Clerk do not have to appreciate my odd sense of humor and justice, they have only to accept that some of us are not inclined to swear oaths that we cannot honor.

Search your own minds and hearts. Are you capable of dispassionate, implacable decisions concerning the actions, motivations, and intentions of others, based upon the testimony of those whose job it is to seek retribution and justify their behavior? Are you capable of discerning lies from truth? Are you willing to accept the burden of decreeing life, death, or imprisonment on the basis of the testimony of strangers? Are you willing to stand up and insist that the decision of the Jury is final–at least until the first of numerous appeals?

What I find odd is that I think far too many of the guilty are let off on “plea bargains” to reduce the number of court cases. I support the death penalty and God help anyone I am called upon to render judgement against who has abused a child or an animal. All of which proves my point: by current standards, I am not anyone’s idea of an ideal juror.

Pfui. Perhaps I will take the easy way out and check myself into the cardiac ward of St. Joseph’s hospital next Monday.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

March 12, 2010

Involuntary Servitude was originally featured on Whiskey and Gunpowder

There are two types of bids in these auctions: competitive and non-competitive. The non-competitive bidders agree to buy the bonds at whatever rate the Fed offers. The competitive bidders will buy the bonds only if they are paying some minimum interest rate. When the bonds are auctioned the non-competitive bids are accepted first at the lowest interest rate offered by the competitive bidders. Any bonds left after the non-competitive bids are sold to the competitive bidders in the order of increasing interest.

Last Tuesday, the lowest bid was 0.0% – no interest. The highest bid accepted was at 0.055%–almost nothing. Nearly 99% of the bids were competitive ones. This makes sense – who in their right mind would buy a bond that pays no interest? (And who DID buy a little over 1%’ worth?!) But almost 30% of the bonds went at the HIGHEST yield. This is quite unusual. How many bidders are going to guess the exact percentage down to the thousandth of a percent? This could signal the market is starting to demand higher interest rates to buy U.S. debt and we will likely have to pay more interest in the very near future, a nice traditional attitude, or at a rough cynical guess, at the very least somebody knew something ahead of time about just how high competitors were willing to go and how much money they were willing to spend. Let’s worry this one around a bit. Forget the interest, which is inconsequential. The first two questions that cross my Medieval mind are “Who was confident enough of prospective buyers’ interest in T-bills to hold off and demand ‘top’ dollar?” and “WHY did they want ten billion in short term bonds–four weeks being very short term–in the first place?” The interest isn’t even penny ante; there is almost certainly more money to be made in lightning trades.

The only answer that sprang to my mind immediately was that someone knew or had strong reason to suspect that it will be safer or more advantageous to hold one sort of government paper rather than the same government’s fiat currency very soon. On the surface, one would suppose the things are interchangeable, which only makes me wonder more what is lurking down in the murky depths. If I know that my competition is willing to buy two-thirds of what is available…and that all the bonds must be sold lest the foundation rock even more under the monetary world (and by the rules of the game)…why do I put in my top bid at 0.055%? Why not try for more, toss in .075%, perhaps, and see who blinks?

What do I really want, the interest, to keep up the sham of an auction, or to hold the T-bills for what they represent/may be worth at a later date?

Let’s let that percolate through the assorted facts and theories in our minds while we look at WHO was buying the bonds.

There are 3 types of bidders in the competitive bid world:

1. Primary Dealers – The banks that are “part” of the Fed (J.P Morgan, Citi, e.g.).
2. Direct Bidders – Groups that bid directly through the Treasury department. Direct bidders are usually other countries such as China and Japan. China, of course, just sold off about that much US paper, leaving Japan holding the biggest and ugliest of the Old Maids out there.
3. Indirect Bidders – These have to bid for the T-bills through a Primary Dealer…but neither the Primary Dealer nor the Fed is required to report who they are. Hmmm. Now, why would anyone want to keep a thing like that secret, other than embezzlers or Congressmen who had kept the cash in their freezers, or possibly someone who wouldn’t want to be known for picking up such a position…Sometimes accounting for how one came by money can be quite embarrassing…

Historically, these are individuals or banks that are not members of the Federal Reserve System. In the last year the Fed has also bid on the T-bills it was issuing through the indirect bidder channels. This is one of the ploys that makes honest folks like us whimper, because it seems like money laundering or Dr. Seuss’ Star-Bellied Sneetches. After the money has been run through the machine several times it can be quite difficult to keep up with what is “real” and what is imaginary, even for fiat currency.

Swapping trading cards is one of the ways they have accumulated their $5.1 trillion balance sheet. Note: Indirect bidders are reported through the primary dealers. Whimper again. If the Primary Dealer doesn’t have to report that he bought, how does he explain reporting who he sold the T-bills to? “Oh, look, the cute wee elves drank the little bowls of milk we put out for them and left us certificates to sell!?”

It is…disturbing…that only 19% of the paper was bought by Direct Bidders, i.e., by foreign governments.

“Primary Dealers are required to buy whatever debt does not sell at auction. Thus it is possible, although unlikely, that the Fed just could not sell the full $37B and the Primary Dealers were forced to eat it. The reason I say this is unlikely is because $37B is a LOT of money even to organizations as big as the Primary Dealers. The Fed is NOT going to put their buddies (the Primary Dealers) in a cash flow bind if there is any way they can help it. But, if the primary dealers did get stuck with that big a chunk, it would mean that our debt is not even AA rated (as Moody’s has been reporting lately.)” comments my friend, Mike. Well…maybe. We were batting around the idea after a recent auction that there weren’t enough direct bids to cover most of the T-bills offered and speculating on the ramifications of that. It should be noted that the rules/definitions of what constitutes an “indirect bidder” have been loosened and fuzzied recently which hardens my suspicions that because our paper is being seen as less and less desirable new ways of disguising who is buying (or “buying”) are being sought. There have been rumors, let’s call them, of funds being transferred to other nations who use them to purchase/”purchase” our bonds. It could be that Citi has laid the groundwork to spring the “no withdrawals for 7 days” scheme to cover forced buys anticipated in an auction in March.

To digress only slightly into the banking situation, Citi is in bad odor this time for warning customers that effective 1 April it will “reserve” the right to deny withdrawals for seven days, almost certainly “banking days.” (See “New Meaning to Special Drawing Rights?”) Wells is in deep kimchee, WAMU and over a hundred other banks are pushing up daisies…banking in general is a pretty dicey business for anyone without a platinum parachute and/or the ability to pull strings…something like 700 banks are in the coronary ward…and FDIC is down another big hunk ($21 Bn) and gasping on the way to reaching into their $500 Bn from the Fed.

Last Tuesday, nearly 70% of the debt issued went through the Primary Dealers and will either be resold to indirect bidders or kept by the Primary Dealers. (In normal times the goal is for the Primary Dealers to be stuck with the debt to leave indirect buyers free to invest their money in the stock market and corporate bonds.) But, then again, in normal times the Treasury is not issuing debt at these levels. Or with this frequency.

The last time this much of the debt issued went through the Primary Dealers was in mid-January of this year. That did not alarm many at the time because the stock market was generally going down and it was easy to suppose Fed paper was picked up by folks selling their stocks and parking their money in T-bills for a month or two until the market returned. This time seems different-–or maybe we’re just being cautious or even paranoid.

Nearly a third of the bonds purchased by the Primary Dealers went at the highest rate (30% of $37B–the amount sold at the highest rate–about the same as 43% of $25.9B, a previous result that I discussed in an article the name of which escapes me. I write a lot of the things, you know!)

It appears that a gaudy chunk of the Primary Dealer purchase went to one person/organization. My friend, Mike, commented “That certainly could be a ‘whale’ like a George Soros or Warren Buffet sensing–or setting up–an imminent drop in the stock market and trying to protect his money – even though the stock market has been going up more or less again for the last month, but it could also be the Fed again buying through the Primary Dealer channel to hide just how bad the quality of our debt is.” It gets harder and harder to hold on to that triple-A rating. Moody’s is of the opinion that AA is pushing it. Spontaneous laughter…maybe Timmy needs to get one of those firms that run banners across the bottom of the screen offering to straighten out bad credit ratings.

Hmmm…Once may be an oddity or somebody’s accountant dropping a decimal, but we’re starting to develop a pattern that I would be inclined to label a trend if we get one more dot that belongs on the same plane. Three dots may show us who’s playin’ with the money. Recall that the Fed announced that it wouldn’t buy any more after 31 March, 2010, so in the next month Uncle Sam needs to come up with a new player in the game of “you buy mine and I’ll buy yours.”

Are you, too, starting to feel that all of this is meshing in ways investors aren’t going to like? The knowledgeable gentleman who brought these facts to my attention commented “at least a 60% chance that Direct Bidders (China, Japan, etc.) no longer want U.S. debt and we are going to start seeing bad inflation in the next few months and the ‘bad’ inflation will turn into ‘way bad’ inflation within a year because the Fed is just monetizing the debt through the Primary Dealer channel.” Optimists forecast hyperinflation no later than 2012, but only the green shoots crowd doesn’t expect it by then. That was my tentative conclusion in January, when we had an auction that looked like this. The banker boys are playing ring-around-the-rosy with electronic digits, or, to put it bluntly again, laundering fiat money.

Knowledge comes from tearing words and figures apart hunting for contradictions, nuances, and straws in the wind. We’re past the occasional straw and looking at what (honest!) is known as a “flake” of hay, a hunk ripped off for an individual animal. That’s useful terminology on more than one level: the well-positioned flakes are ripping us off, as usual, but it is also possible that some of them will be eaten in the process. If all the banks on the watch list fail the estimated bite for FDIC is something like $409 Bn, which, when added to how much it is in the red now, would wipe out c. 86% of the imaginary “special fund,” and another half a trillion dollars.

Analysts work with what we’ve got and keep dumping data in the hopper. Our..inner minds?…extrapolate from the handful of puzzle pieces we have and test hypotheses and conjectures, worrying bits of data that don’t appear to fit anywhere, and leaping blithely over several missing steps when necessary to form working hypotheses. If the picture appearing weren’t so unpleasant I would be enjoying myself because quite a few bits are slotting into my mental grid very neatly. A reader asked recently that I write an article on how I think and analyze, and the one- sentence answer is “Accumulate a lot of information and impose order on it.” In time we learn to deduce what the probable structure is and keep that hypothesis in mind until something disproves it. Not closing our minds in the process! We’re trying to discover the truth, not pushing global warming.

Facts that indicate we’re in for–at best–the Greater Depression with strong possibilities of civil unrest or even dictatorship have been accumulating for several years, now. All that has varied are the time table and speculation on which pillar will collapse first placing further stress upon the remaining supports. Every additional strain makes the aging system that much more rickety, and here in the Whiskey Bar we’ve been expecting the collapse of the commercial real estate bubble–and the collapse of the bond market. One odd recommendation I haven’t found a logical home for in the emerging picture is taking physical possession of stock certificates. Helpless gesture; I didn’t think anyone who dealt in round lots ever wanted to hold those things. Don’t we just leave them “in street name?” Ideas, anyone? A simple answer is a pitying, “You were a trader, so you never planned on holding anything you bought for more than a few months to a year or so. People who are in it for “growth” or “investment” should keep up with such papers in case the computers all go out.”

I expect the bond market to go first, and soon. As Abraham Lincoln asked, “How then will I fill my coffers?” If the Washington gang can’t sell paper to cover creating “money” out of thin air, where will they go for funds? My call is the GRA, a grab for the fifteen trillion held in private retirement accounts of one sort and another. I’m no Miss Cleo, but the sheer relief of “solving” the projected debt now and through perhaps 2020 will almost certainly set off an even bigger bender of government spending. Hurrah, hurrah, they don’t have to decide between shutting down a lot of useless, detrimental government programs and throwing Grandma out when she needs an MRI…can put off whether to make trial lawyers or union/government pensions take the next hit…can put off cutting welfare programs while inflating their way out…They think. Some day soon we’ll discuss Juan and Eva ruling Argentina.

Sorry, Charlie, as the old tuna commercial went. The only way from here is down, down, down.

The above was my first draft, which I sent to Pete (the Middle East expert), Mike (who sent me the basic figures, darling man that he is) and our own Tex Norton, before leaving the matter to bubble through my brains. Today is when things really started to pop. Tex wrote back thanking me for the “brilliant” thought that there may come a time when an instrument denominated in dollars may be worth more than the face value–and my mind bonged “Ka-ching! Like silver ‘dollars’ being worth more than FRN.” I thanked Tex prettily but started writing that I’m not fully responsible for what the gremlins in the gray matter do. Just as I prepared to write that I didn’t know why that such a disparity in relative value might be, my brain smacked me firmly. Of course I can account for how it might be that a short-term T-bill could suddenly be worth more than face value.

Two things were obvious instantly and my brain added, smugly, “And don’t forget Hugo Chavez.” Right. He devalued lately, but there is a tiered system; what your money is worth depends on where you are spending it. Brain also said, “GM, yoyo.” Right; what your stock was worth after the government takeover depended upon whether you were union, management, or Joe Nobody who owned 22 shares. The “obvious” reasons were what we know about legislation with short sections that exempt “certain corporations located in New Jersey” or American Samoa, and SPQ-USA, where Senators rail loftily over bonuses they had already approved in previous legislation. Ayn Rand, of course, and the “frozen” railway bonds which could be melted by those with pull and cash. Piece of cake.

The fix is in, and in time to come–perhaps very shortly–some bonds may be more valuable than other pigs. My advice is that we NOT buy T-bills because that’s bound to be a mug’s game; the rules will be written carefully to benefit only connected players, and not for the man in the street or even the Whiskey Bar.

Regards,
Linda Brady Traynham

March 1, 2010

Gaming Imaginary Money was originally featured on Whiskey and Gunpowder

Some of us advised long ago pulling a big hunk of cash out of the bank every Friday afternoon just in case yours is “it” in the next round of “Friday Surprise.” No harm done, you can always redeposit on Monday if the doors are open, and interest paid on checking and savings accounts is so close to infinitesimal that withdrawals make a very sensible and economical insurance policy. Mind, we are regarded as a little paranoid, and sometimes we get superior smiles when we point out that the suggestion has been made that SWAT teams be put in banks to insure orderly withdrawals…and then they doubled the amount covered by the perilously near insolvent FDIC…and today there was confirmation of a twist on other “precautions,” although short of a bank “holiday.”

What if someone refined SDR on the personal level to mean “the ability to cash a check at your local bank?”

John Carney reports in Business Insider:

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” Citigroup said on statements received by customers all over the country.”

Some of us are cynical enough to suppose that means “seven business days,” which is actually nine days for almost all banking institutions. And that Citi wouldn’t disclose this information if it were not required to do so. And that this means that when a Citi customer walks up to an ATM during such a ban on withdrawals it isn’t going to disgorge money upon swiping a debit card and entering a PIN number, either. Gee…it may well mean that Citi will not honor checks written to the electric company, your mortgage company, your country club, or your gym, either. You will notice that their bland statement does NOT say that you will not merely be denied the right to write a check for cash. It uses the inclusive “withdrawal from all checking accounts.” That “ALL” in there may not be a bank holiday but it is certainly more than a lost weekend if you are unable to access your funds.

Before continuing I’m going to put in a plug for my favorite bank, First Convenience. They actually mean it! I have my choice of two locations nearby, inside WalMart and in the Kroger’s grocery store we frequent, and at least one other farther away. (BoA has one in the twin cities. Wells has one.) FC is open from seven a.m. until seven p.m.–six days a week! The slackers are only open from noon until four on Sunday. THIS is real convenience for a night owl, being open hours I’m in town in locations most of us visit anyway.

Their hours and locations are not the only reason I cherish First Convenience. I don’t think they are likely to go under, and I really like being on close personal terms with my bank manager who is available between those vital hours of normal closing time Friday and possible opening hours on Mondays following at traditional banking institutions. I always stop and pass time with Kenny and the girls, even when I have no business. Perhaps at that level they won’t know anything interesting before those who are watching the monetary situation do…but perhaps they will. I am informed that there are rules and matters bank managers and brokers are forbidden to tell clients, but I think I’m empathic enough to recognize a shattered bank manager or that if he said on Saturday, “Mrs. T! You didn’t make your usual Friday withdrawal!” when we both knew I had, that I’d “get” it, no rules broken. As Robert Heinlein observed, “Sure, the game is rigged, but you can’t win if you don’t play.”

This is banking as I knew it 50 years ago; I called Kenny a couple of weeks ago to be sure he had enough spare cash to pay for the bulldozer we bought before I sent the former owner over with my idea of a pretty big check. Storefront banks don’t always have big piles of bills in their small vaults and they appreciate a little advanced notice to accomodate customers. He did, big smiles all around. If YOU can’t get your bank manager on the ‘phone immediately, try First Convenience. (No, I don’t own stock in FC.)

Here is another interesting aspect: “‘The seven day notice policy only applies to customers in Texas,’ Ira Stoll reports at The Future of Capitalism. ‘It was accidentally included on customer statements nationwide.”

How very interesting. Only Texas is being targeted? Accidentally included? Does all their billing come out of one location, such as Dallas? Unlikely. Posssible, of course.

“Whatever the explanation, it doesn’t exactly inspire confidence in Citi,” Stoll writes. “But it’s hard to believe a bank would be sending out a notice like that on its statements.” No kidding. Are we to suppose that the preponderance of Citi’s funds are in checking accounts in Texas?! Well, Texans certainly brag about how rich (other) Texans are, and we have more than our fair share of millionaires and a billionaire or three, but I can’t see that sequestering local funds for up to nine days would solve a bank-shaking event. It would, of course, buy a considerable hunk of time.

This “mistake,” if such it is, does allow Citi to take the policy nationwide at any time. “You were informed,” they can say loftily.

Let’s go back to that intriguing, “While we do not currently exercise this right and have not exercised it in the past…” Hmmm. Passing lightly over the fact that few of us would entrust our capital to banks unwilling to hand them over on demand…For years banks have put holds of up to two weeks on deposits (a length of time that may have made sense when such things were handled by snail mail instead of electronically), which can be justified by the supposition that not all bank drafts will be honored by the fiduciary institutions upon which they are drawn. (Remember to tell your kids to cash local checks at the bank upon which they are drawn; sometimes you have to settle for cashier’s checks instead of cash if the amount is large, but your bank should accept that at face value since a CC guarantees the funds. Amazing what our children don’t know and might need to. I learned recently how very easy it is to change where your Social Security check goes–at least if you do it the way I did, which was to waltz into Kenny’s office and tell him what I wanted. One ‘phone call from him, done while I waited, was all it took. Confirmed, checks now going to FC.)

We have been tracking the problems of Citi–as well as BoA, Wells, and others–and marveled over a giant bank that made a “profit” only because of the bailout and used half of those profits for bonuses.

I consulted a friend in the industry and got this back: “No light…I imagine it is just precautionary should a bank run happen for whatever reason. Have bonus figures been released? If not, this may be the concern. Texas is a strong market for Citi. Citi is also very smart with holding money to maximize interest. For example, Citi chooses to do 401K matches annually in one allotment vs matching each paycheck deposit.” Hey, a few dollars here, a few dollars there, if you’ve got enough employees you’re talking real money.

If you can keep the float on all deposits even once for “seven days” that ought to pay the champagne bills, at least.

Still…”only in Texas.” There is something very odd going on, and perhaps it is “nothing” more than Citi being ahead of the curve and others will follow. Perhaps the regulation which obliges Citi to inform customers that it may or may not hand over their funds on demand stipulates a particular warning period.

Curioser and curioser…what forces a course like this, one which seems sure to cause a slump in share value and a rash of account closings?

Big banks make me nervous these days. At present I’m using small, local chains of fewer than a dozen banks that do not make loans on strip malls or MacMansions, and a military credit union that doesn’t do so, either. At the very least I think we should all scan this month’s statements from all banks carefully. If your bank has the gall to tell you that it has the authority to decide, capriciously, not to disgorge your funds on demand, I’d find another bank.

Citi may be in bigger trouble than we have deduced or they may be first with an idea intended to be a boon to bankers that bodes ill for our ability to conduct business as usual. Or, just possibly, this has something to do with the Fed’s decision (see my archived “They’re Going to Kill the Fed”) to stop purchasing treasury bonds on 30 March, 2010.

Gold, silver, and energy still look like the best places to stash our simoleons, but a hefty deposit under your mattress might be very comforting any time after April 1st if you’re still a Citi customer by then.

Regards,
Linda Brady Traynham

February 25, 2010

P.S.: We have always suspected that the fall of the dollar could be set off by some slight event; usually I put that as “China turning loose the butterfly.” The only way I can account for Citi’s announcement on what I know (other than the article referenced above) is so absurd I hesitate to “pen” it. I am really a very modest lady, for all my eccentric, colorful ways, and moving and shaking in my life usually means letting the fast-growing goat girls in to be fed and shaking up a gallon of calves’ milk replacer if we’re out of goat juice, or a little belly-dancing practice.

It would be interesting to know when the statements were printed, because no matter how ludicrous it sounds (and it really does), the fact remains that I wrote an article on the Republic of Texas for W&G and in less than a week my “count” on Google has more than tripled, and now Citibank has declared that slightly over a month from now it may or may not let Texans have money out of their checking accounts!

I guess it COULD be that the “right” person read the case for reclaiming Texas independence and decided the “right” to freeze all accounts for a week might be useful sometime. That is about as likely as me writing the economic equivalent of the Harry Potter series, but strange things happen in this world. Or it could be that Sherlocke Holmes is always right. If we can eliminate everything else, what remains, no matter how unlikely, is the truth. My money’s on devaluation of the dollar being right around the corner, but it is always possible that we’ll sing Judas’ song from Jesus Christ Superstar: “The world’s in ruins around us, and all because of you.”

I don’t think this is an April Fool’s joke. In all likelihood the analysis was right in the article on declaring the Fed–a private corporation–bankrupt in the near future. Too big to fail? Nonsense. It already has. ROFL…either way, maybe we’ll get a Nobel in Economics. LBT

A New Meaning to Special Drawing Rights? was originally featured on Whiskey and Gunpowder

Gold game-over, correct? Not exactly.

Recall that India bought 200 tonnes of gold late in 2009 along with Sri Lanka and Mauritius; each of which also bought small amounts at the same auction. The IMF sale is purportedly based on the IMF’s desire to raise funds to help poor countries. I’ll leave a discussion of that ill-conceived notion for discussion at another time. The fact remains that the gold is for sale and apparently no buyers are willing to step-up and be counted. At least, not publicly counted. Wonder why?

There are probably as many excuses as there are potential buyers. One Philip Klapwijk, executive chairman of GFMS, the London-based precious metals advisor, thinks the IMF’s decision underlines a general lack of buying interest now that gold exceeds $1100 per troy ounce. After noting the publicity that India, in particular, received as a result of their purchase last year, it’s quite possible that other potential buyers simply don’t want to risk any adverse publicity.

China has been reported to be buying gold for quite some time as well as encouraging its citizens to also accumulate gold. It appears that China’s purchases thus far are from local mines within the country. One would think, therefore, that China would be a prime potential buyer for the IMF sale. Could it be that China doesn’t want to rock the US dollar-weakness boat? If China stepped up to the plate, the interpretation could be made that China had lost confidence in their US Treasury holdings. Possibly. It has been widely reported that Russia has also been accumulating gold and, therefore, presents a highly potential IMF-sale buyer. Russia doesn’t have the same US dollar exposure as does China, so their reluctance to step-forward is not immediately obvious.

Still another potential deal-killer is the outright disclosures themselves. Prior IMF sales have included specifics including the name of the buyer, the quantity purchased and the price paid. Gold is extremely volatile. Should the price decrease after such a purchase, the buying entity could then be ridiculed for having over-paid. Recall the ridicule still being heaped, rightly so, on PM Gordon Brown who, while still Chancellor of the Exchequer of Great Britain, managed to sell Britain’s gold stash at the very bottom of the market? You have to admit it takes real talent to be that stupid.

For at least the last two (2) decades, approximately 400 tonnes per year have been sold by central banks. Presuming this year will be no exception, an additional 191.3 tonnes on top of a 400 tonne average is not a small percentage increase. While the IMF has repeatedly stated that they wish to avoid disruption in the gold market and that they plan “phased sales,” what amounts to an almost- 50% increase in volume is certainly a major consideration.

It is also important to acknowledge that European gold sales have recently diminished. If this trend continues, an additional 191.2 tonnes sold could be somewhat insignificant. The jury is still out.

Where does that put us? Do we keep what we’ve accumulated, sell or buy more? To answer that question, you need to go back to basics. Recall why you started accumulating gold in the first place. Has anything changed? Is the dollar now stronger? (Well yes it is, but that is probably a short-lived phenomenon). Have the underlying ground rules changed? Since the world is awash in fiat, has anything really changed to cause you to panic out of your gold? Do I even have to address this question?

Yesterday, February 18, 2010, the Federal Reserve announced that they were increasing the Fed Discount Rate. That was certainly a surprise – at least to most observers. Was it meaningful? I suggest it was not meaningful. Recall that the Discount Rate is completely different from the Fed Funds Rate. The Discount Rate applies to the interest cost of overnight borrowing. If one bank finds itself short on reserves, it borrows from another bank overnight to keep itself within the required percentage reserves. The next day, it covers its needs for reserves and repays the loan. The Fed Funds Rate, on the other hand, refers to the rate banks must pay to borrow from the Federal Reserve. The Fed Funds Rate is much more critical to the actual cost-to-borrow rates businesses and individuals pay. What just happened is unimportant unto itself, but perhaps is more important from a perception viewpoint.

You’ve heard that perception is more important than reality. The immediate reaction to the Fed move was strictly perception because it certainly had no bearing on basic interest rates. Investors want to “know” that the dollar is being protected; that it is being supported; that it is not being sacrificed for the sake of covering the madcap spending spree from Washington DC. On the one hand, we know that the Discount Rate doesn’t affect dollar strength. On the other hand, the fact that the Fed would raise the Discount was apparently interpreted as meaning the Fed would also, some day, any day now (NOT), increase the Fed Funds rate, too, and thus protect the declining dollar. I submit that is why the market reacted positively. It certainly was not a reaction based on fundamentals. Perception works, at least for short time periods.

The argument for owning gold is that it offers an inflation hedge. With world-wide fiat money in circulation that is being increased in volume at the whim of the respective issuing governments, anyone interested in preserving their accumulated wealth must take pro-active measures to protect their positions. One way has been to stash capital in assets that tend to maintain value regardless of debased currencies. Gold has met that need for thousands of years. It’s unlikely that anything will occur to change that protection in the near future. Is this not still the basic protection we seek?

I’m always pleased when what passes for main-stream beliefs pokes fun at my investment portfolio. That tells me I’m still on the correct path to prosperity. I accumulated gold all through the 1970s as protection from the falling dollar. Recall that Nixon killed the dollar on August 15, 1971 when he closed the gold window. Anyone paying attention could then predict the outcome. Gold rose.

As gold rose in price, more and more folks became aware. In early January, 1980, several of us were having lunch at a restaurant when our waitress asked about our line of work. When we mentioned investment advisory, she volunteered as how she’d just taken a 2nd mortgage on her home and bought gold. After she left our table, I said “Guys, it’s time to sell!” I actually sold that afternoon – at $750 per ounce. That was $750 on the way up to the top at $850 before it crashed. Sold too soon, right? Wrong. Never be greedy. It was obvious by that time that the general public had become aware of gold and were now buying. In fact, it was a buying frenzy. As Bernard Baruch was fond of saying, “When the shoe-shine boy starts touting stocks, it’s time to sell.” We’re nowhere near that gold sell-point yet.

Yes, you now see more and more commercials advertising gold investments. At the same time, you see more and more ads from folks who will buy your “junk” gold. There are even Tupper-ware-type parties where neighbors bring their “junk” gold to sell to a visiting buyer. Then the sellers brag how happy they are that they were able to get rid of their “junk” gold and get real cash they can now spend. No mention is ever made that the price they were paid was far below the prevailing spot price of the underlying gold. What a deal!

Is gold in a bubble? Possibly, but if so, it still has a long way to go before the top is reached. The top will make itself known if you simply watch the market actions. In the meantime, what else can you do, if not invest in gold, to help protect your accumulated wealth?

Cheers,
Tex Norton

February 24, 2010

Follow the (Gold) Money was originally featured on Whiskey and Gunpowder

Snicker. Will people never stop falling for my sucker bets? Very seldom does money expended on education equal excellence of outcome, as Washington, D. C., has been demonstrating for decades. No doubt you remember that Hillary Clinton had a free hand revamping the schools of Arkansas, resulting in a national rating of dead last, so we can conclude that lawyers aren’t necessary either.

Our computers have a wonderful feature that allows us to reconfigure to the last time at which they were running correctly. This strikes me as a good, high tech idea, so let’s figure out when we last had good schools that defined “educating the children” as something other than phoney self-esteem, rebellion against parental values, and submission to authority.

It is neither vain nor hyperbole to say that your children, if they finish four-year college degrees, are extraordinarily unlikely to know as much as my generation did after being graduated from high school about the time Fidel Castro overthrew Fulgencio Batista. At that time many college diplomae did not guarantee the level of erudition possessed by HS graduates in the early thirties. In the Fifties the white illiteracy rate was 5%, but the graduates of all-black Kemp High School were only a point behind. This next story is like trying to explain that there was a time when there was no MacDonald’s or iPods, but there wasn’t any other ethnicity in a town of about 40,000. The school board nearly had a nervous breakdown when the first three Hispanic students showed up because they couldn’t decide what to do with them. (DO try to see this as funny because it IS.) You see their problem: you can’t build a highschool for three kids; you can’t send them to Kemp because they aren’t black, but they shouldn’t be in lily-white Stephen F. Austin, either…eventually, they put them over with us. The only girl spent her entire time with her head hunched low probably because she didn’t know what else to do. One of two brothers was very quiet, but Anastasio Hererra was a tall, handsome, outgoing, very bright young man and he made a place for himself easily. Stash was not only my lab partner in Chemistry but went on to become the first Hispanic elected to the “state” legislature! We’re proud of him, and I had dinner with “Andy,” as he is known now, and his wife not long ago.

That is merely an interesting anthropological sidenote. The important part is what we were taught at SFA. Every last student from my class of about 400 was graduated honestly (although three of the boys had to do summer school) and Nancy whatever-her-name-was who got pregnant in the 9th grade and had to drop out — and we’re still talking about it fifty years later. Back then the white illegitimacy rate was 5%; for blacks it was 25%. The current rates have gone to 25% and 80% respectively. I took 3 years of Latin, 4 of Algebra, Geometry, Chemistry and real biology, not keeping a small shark alive all year and then watching the teacher dissect it — an actual course in Houston two years ago. We had our hands in formaldehyde frequently from the very start. Every student was required to master typing and those not going to college had to take two years of bookkeeping and shorthand, and guess what? They had sufficient skills to get office jobs whether they had spent the morning on academic subjects and afternoons as apprentices or not. Speech was required, and I studied Physics, Spanish, Texas and US History. Driver’s Ed? I think there was such a course, but I learned at home, like most kids. Home Ec? Don’t be ridiculous. We were being educated, not baking cookies, something else I learned at home. Our books were full of facts, not political correctness and “diversity.”

One obvious way for our children to learn what we know is to teach them ourselves — if there is the interest and a parent who can remain at home, the latter being an increasingly rare luxury. The home-schooling movement has been growing for some years now and perusal of the top scores on the SAT yearly will reveal the efficacy of this method. Time and again those scores demonstrate that high achievement is found in two groups: those who are home-schooled and those who have a cultural heritage of valuing education. Clearly it is not possible to provide every child Chinese parents (although many of the methods tried by legislators and unions are about that impractical) but home schooling is within the reach of many.

Given no restrictions on cost virtually all of us would enroll our children in the best private schools available — and a major goal of the Republic of Texas is to reduce taxes to the point that you can afford to send your children to the Academy of the Sacred Heart or Harlingen Military Academy or any other school of your choice. It is a given of free market capitalism that where there is demand supply will be forthcoming because there is profit to be made. Our goal will be to provide true school choice over a very wide range without taxing those who do not have children enrolled in various institutions of learning. TANSTAFL, people. There is absolutely no reason why any of us should pay for the education of the children of others. We can anticipate that private schools will both expand and spring up to meet the need — and their standards will of necessity remain high because parents will demand what will be seen clearly as value for their money. Already Academies offering music, sports, and lab sciences have been established to round out the curricula of those being schooled at home. The tuition must be an excellent swap for safety and not having to put together home biology and chemistry laboratories.

You might ask, “What about traditional neighborhood schools?” By all means, if you and your neighbors want your children to walk to nearby Travis Elementary, pool the dollars you choose to spend on their education, hire your own teachers, buy your own books, pay your own utilities, and make your own repairs. You have no right to demand that from your neighbors. Remember, we are talking of a Republic where over a hundred taxes have disappeared, including income and property taxes, fuel, alcohol, and cigarette taxes. In such a nation individual families will be able to afford whatever means of education they prefer including hiring a governess or a tutor. Yes, some people earn more income than others — and guess what? Some of us hold that what you earn is yours to spend as you like.

However, we will suppose that there are those whose income is so small that at least one “public” option is deemed necessary. Here, too, there is a simple free-market solution. Subject matter appropriate to each grade level should be made available on public TV and run twenty-four/seven. Would that be for free? Of course not! Nothing is for free. Make the sacrifice and get cable TV. However, we do have a public fund from taxes on oil production which will be more than ample. This method would be very inexpensive to set up and quite economical to broadcast. Find the very best, most erudite, most interesting teachers, choose from old textbooks for the basics, and each lecture and other segment need be recorded only once. A particular advantage of having phonics-based reading taught constantly is that this is the best and only hope for those currently illiterate to learn to read quickly, easily, and well. The length of this article precludes regaling you with details of how I know such a reading program would work, having developed and copyrighted mine twenty-years ago. If enough of you want to know I will write a separate article on it. For now, just go with the concept that reading, arithmetic, geography, and history can be taught beautifully in the comfort of your own home. Chuckle…take it from someone who has been rescuing illiterate nine-year-old boys for a very, very long time: little boys cannot sit still and do anything else. If your bright, wiggly son is sprawled on the floor eating cheese and crackers, playing with his Vroom-Vroom cars, and patting the dog he can learn a great deal more quickly. I never require my remedial students to sit still and be quiet! Sitting inhibits their learning, strains their composure, and reminds them constantly of every bad classroom experience they have ever had. Test their beginning knowledge? Whatever for?! It is far easier and far less stressful to start with “B is the name of this letter but the work it does is making the sound ‘buh.’” The child feels good when he actually knows something, he sees reading as a system that makes sense, and, sure enough, if he pays even moderate attention he will learn. Gentle laughter…the first lesson starts, “It isn’t your fault that you can’t read, and it still won’t be your fault if I don’t teach you. That would be my fault for not explaining how correctly. However, no one has failed to learn in twenty years and you aren’t going to, either. It’s even going to be a lot of fun!” And it is. I make it fun. How long does it take? Usually a couple of hours twice a week for three to six weeks, depending upon how badly the kiddo has been abused and confused by being expected to learn to read English when it is taught as though it were Chinese ideographs and not a phonetic language.

In addition, such instruction can be made available easily and inexpensively through the home computer. This would be particularly useful as the students advance and allow for inter-active testing. Remember: we’re going to clean the reading mess up first. So far as I’m concerned — should I be named Secretary of Education anywhere — you may have your HS diplomas any time you are able to pass all the exams. I don’t care if you are nine or ninety, only that you can demonstrate mastery of reading, writing, arithmetic, history, algebra, civics, “keyboarding,” and such other subjects as I deem wise and necessary. (Hey, anyone else who wants to set up a course of study, have at it. For fun, ask Google to show you an 8th grade exam purported to have been given in Kansas about 1870. Bear in mind that eighth grade was as high as school went, then. I can pass it, but I doubt that I could cover myself in glory, and I have three degrees and have done graduate work in five fields! Why? For fun, of course! Other than contract work after the children were older — editing, writing instructional materials, and doing analytical project reports — I was a classic stay at home Donna Reed housewife. We all adored summers because I taught the kids daily…) Hey, I probably won’t demand more than 90%.

Now, I do not suppose that my plan will be popular with teachers’ unions because we won’t need nearly as many teachers, will we? The best will be employed privately, and it may be that those who school at home personally or through multimedia might like to hire a retired teacher once a month or once a week to do the icky things like give tests and soothe any anxious feelings that Mama isn’t doing a fine job. The rest of them can take up more productive work or move to some state that still thinks class size and money are important.

We don’t have classes that are too big or too few teachers; modern public schools teach the wrong things with the wrong methods. Well, sure, if you insist I’ll agree modestly to let you call me a genius but the simple truth is that all of the kids in my schools learned well, and all the kids over at Kemp did nearly as well. I wasn’t even Valedictorian or Salutatorian, despite being the class nerd! (BITTER subject! PE was a required subject, and I am and always have been an Olympic class klutz. It doesn’t matter if you make all A’s, that courtesy “C” you get for showing up, suiting out, showering, and trying not to have a nervous breakdown destroys your GPA. I assure you, if the game involves a ball, sooner or later I will get hit with it. In eight miserable years no teacher ever succeded in teaching me to play even one sport acceptably.)

That only leaves us one small problem: those whose native tongue is not English. Once again, the experience of many decades and having attended quite a few different schools suggests an answer: put all those who need it in special schools where English is taught and don’t let them out until they have learned. Spanish is as simple as phonetic languages get, and almost anyone can be taught to read it in about fifteen minutes. Teach the kids to read and carry on instruction in arithmetic in Spanish while focusing on English. English is the language of business and they must learn it, but understanding how to read Spanish will be a great help when they get to English because the basic principle is the same: see the letters, say the sounds, and run them together to get words you know that make sense where you find them. Any kiddo with an average American television addiction has at least an 8th grade working vocabulary. The “test” I just gave you develops enormous reading comprehension because the student is concentrating on whather or not what he said makes sense; if it doesn’t, he made a mistake. He isn’t trying to tell “cat” from “dog” by appearance, that being what “Look-Say” is all about. He already knows most of the words he needs to read a wealth of material, and once he has mastered my idea of the basics (ALL there is to know) he can use a dictionary. He already knows it isn’t “The princess sayed.” It ought to be, but we have an agreement to say “sed” when we see “said.” D’you know, there are only about two dozen of those little horrors and your preschool child knows all of them?! Yup. You won’t hear one say, “I loave you, Mot-her.” The only word Andrew, then 5, missed on an eighth-grade Reading Assessment Test was “carburetor.” He didn’t know that Americans say “CAR-buh-rayccb-tor,” so he read it as “car-bew-ret-or.” Which it should be. How long does it take to go through the ten rules of reading and about 250 sounds and letter combinations encompasing everything there is to know about what reading really is and how we really do it? About an hour and a half! After that the child masters one segment at a time. Takes about six weeks, working just a little every day, to teach a child who has not been exposed to “Look-Say.” Think of all we can teach in those endless hours they won’t spend for five years learning to read somewhere between third and eighth-grade level in most cases. Further, an extensive study done in Seattle showed the 90% (you read that right: 90) of all juveniles who went before a judge that year were functionally or totally illiterate. Do you suppose there is a correlation, there?

Right now you and I are usually the sole guardians of what our children and grandchildren are learning. If we can regain responsibility for choosing the schools and teachers they have even if we lack the luxury of teaching them ourselves test scores will rise again. Unless you would prefer to argue that children today are inherently more stupid than those born about 1940? Obama cut a program in DC which provided $7,000 vouchers for a few lucky kids. The kids learned, and each voucher saved $4000 that would be spent if they were in vastly inferior public schools. Parents loved it, the children delighted in it, but unions and statists loathed it. The argument was the same — although unspoken — as at the time of the Industrial Revolution: “Send them to school? Teach them to read? Whatever for?! They’ll get ideas above their stations.”

For over fifty years our schools have been under the control of those who lean very far left. The only way to take them back is through propositions, referenda, or restoring the Republic. That’s either republic, folks, the Republic of Texas or the republic the founding fathers set up and hoped we would be able to keep.

Regards,
Linda Brady Traynham

February 23, 2010

Educating the Masses was originally featured on Whiskey and Gunpowder

In that article, I pointed out that as the government-required minimum wage increases, fewer and fewer new jobs become available and existing jobs disappear. Feeling the ‘heat,’ the Feds are now contemplating still another “stimulus” to create the very jobs they destroyed last summer. I predict their current efforts will be another abject failure.

Step back for a moment and view the overall economic conditions now faced by Americans. Well-documented economic shenanigans by banks and brokerage firms caused a major melt-down in our economy. In their attempt to survive, many businesses cut back on expenses including labor. Simply put, jobs were lost. The official rate of unemployment nation-wide skyrocketed to over 10%. The true rate of unemployment is now at 20% when you include all the folks who have simply given-up looking for a job or are reduced to part-time work. And this is now the point at which the unintended consequences begin.

Still another government program (pogrom?) has been in effect for decades: Unemployment Insurance. The benevolent intention was to provide a “helping hand” to folks who’d lost their jobs during that period in which they looked-for and obtained other employment. In our current malaise, those benefits have been extended and extended. Benefits can now be collected for up to 40 weeks and an extension to that “limit” is also being considered by Congress. So let me ask you: If you can be paid for not-working, do you really have a sincere desire to look for new employment? Are you not more inclined to relax, bide your time and hope that you can ultimately find that high-paying replacement job? Moral hazard anyone?  (Editor’s note: a splendid young former marine–two tours–I’ve known all his life is using his $870 after withholding every two weeks to finance college this semester, which I suppose to be an unintended consequence, indeed!)

Want to know how to very quickly reduce unemployment to near-zero? Eliminate unemployment benefits all together. Heartless as that may sound, consider what is now going on behind the scene.

You’ve been laid-off. You had what passed for a good job at a good rate of pay. Now you can’t find another job that you 1) Like, and 2) Pays you what you want to be paid. So you remain unemployed. You’re unemployed NOT because you can’t find work, but because you can’t find a job that meets your unrealistic (in today’s economic circumstances) requirements. Since Uncle Sugar is willing to pay you unemployment benefits for up to 40 weeks, no big rush to take just-any-job, is there? This is yet another moral hazard created by our government.

Do you suppose the folks in Washington don’t know this? Since they do know, the question remains: Why do they pursue what they know won’t work? Ah, again, we simply follow-the-money.

Washington is comprised of politicians. Politicians spend their entire careers primping (pimping?) for their next election. Virtually everything they do and consider doing is predicated on getting themselves re-elected. Nothing that might be in second place even comes close. How they approach that objective varies from person to person, but one thing is common among all. They try to win points with potential voters who will support their re-election. Enter you as an out-of-work voter. What can I, the politician, do for you to convince you to help re-elect me in my next run for re-election? Why, I can pay you to do nothing. I can pretend to be on your side against the “greedy employers” who are only looking out for themselves. I can pretend to help you buy time while you look for that elusive job that pays you far more than the current market will bear. I can help make you feel special. I can pretend that I care about your welfare. Just remember my name when it becomes your turn to vote. That’s all I ask.

The game called politics simply pits the “ins” vs the “outs.” Those that are in do everything they can think of to stay in, and those that are out do everything they can think of to get in. That’s the entire game. Period. If something positive gets accomplished in the process, well that’s an unexpected side benefit. Unfortunately, under normal circumstances, far more goes wrong than goes right. This, then, is the result of the law of unintended consequences.

Sound cynical? You know it’s true. But since it’s not your ox that’s being gored, why should you care? After all, you’re the one getting the free unemployment ride.

Human nature demands that you look-out for number one. That’s natural. That’s rational. What is not rational is to ignore the fallout that occurs when you try for a free lunch at someone else’s expense. Not smart. That’s the action that comes back to bite you when you’re not looking and least expect it.

In a recent article, Chris Mayer of Agora Financial’s Capital and Crisis newsletter wrote about what he called the Yellowstone Booms and Busts. He noted that “In the late 1800s, Yellowstone National Park’s game population — its elk, bison, antelope and deer — began to disappear. So in 1886, the U.S. Cavalry took over management of the park. And its first order of business was to help bring back the game population.”

Well, you can already guess what happened. “The surging elk and deer populations ate a lot more. This caused the plant life to diminish. Aspen trees, for instance, started to disappear, eaten by the numerous elks. This hurt the beaver population, which depended on the aspen tree. The beavers built fewer dams. The beaver dams were important in helping prevent soil erosion by slowing the flow of water from the spring melt. Now the trout population took a hit, because it didn’t spawn in the increasingly silted water. And so on and so on…”

I referenced this brief account because it is usually easier to understand the concept when it is presented in a detached manner. Yet the identical domino effect occurs every time some artificial interference prevents a natural occurrence from taking place. When government steps in and tries to do something that would not otherwise take place, far-flung consequences also occur. We never know in advance what those might include. We can, however, make an educated guess.

In this case, no jobs will result from government efforts to create jobs. It is also reasonable to expect that the opposite will occur. Fewer jobs will be available because of government interference with the free market. Government efforts will utilize funds that might otherwise have been available for businesses to use as capital with which to create jobs. Governments simply do not create jobs. Private industry creates jobs. Governments create interference with job creation. But government job creation “sounds good!” Too bad it simply just doesn’t work.

What does work? You’ve heard the answer many, many times. Have government just get out of the way and let private industry do their thing in a free market environment. Period.

That statement doesn’t set well with the political class, however. Henry Blodget, of all people, posted a short article by Joseph Stiglitz on February 17, 2010 entitled We Need a Second Stimulus Now, Says Nobel Laureate Stiglitz, or Americans Will Be Unemployed for Years. No, Mr. Stiglitz and Mr. Blodget. That is exactly what we DON’T need. A second Stimulus will simply prolong the high unemployment for years. Government getting out of the way and allowing private industry to correct the government-created problems is the only way the unemployment problem can be solved quickly. Fortunately, the reader responses to this article were overwhelmingly critical of Stiglitz’s position, too. That tells me the American Public is no longer easily bamboozled by the political solution.

As I’ve been considering this no-jobs problem, a Broom Hilda cartoon from perhaps 30 years ago came to mind. To paraphrase from memory, Broom Hilda is sitting in her rocking chair while a friend is reading to her from that day’s newspaper. “The government announced today that a massive new government spending program will be established. It will employ hundreds of new government workers at a cost of millions of dollars. ‘We don’t really expect the program to accomplish anything, said a spokesman, but what the heck, it’s not our money.’ Broom Hilda then gulps and her friend responds “I made-up that last part just to see if you were listening.” In the final frame, Broom Hilda remarks “Now tell me you made-up the first part, too!” I’ve always been impressed that a clever political cartoonist can present in just one to perhaps four frames a concept that otherwise takes 1500 words of prose to develop. If we adjust that cartoon for the intervening inflation over the past 30 years, that cartoon today would read “thousands of new government workers costing billions of dollars.” Scary indeed.

Yet, isn’t that exactly what Washington is doing these days? The cartoon would be funny if it were not so true. Just throw more money at each and every problem. Don’t give any thought as to whether or not additional money is the solution. Just make it look to the public as though we’re doing something.

The year 2010 is what is called a mid-term election. You can already see the “I want to be re-elected” class starting to scramble. Several notable politicians have announced they will not run for re-election. I guess they no longer wish to expose themselves to the embarrassment of being defeated at the polls. Wouldn’t it be interesting if most of the so-called incumbents were simply defeated in their bid for re-election? That’s not a permanent solution, but it sure sounds like a good start.

Cheers,
Tex Norton

February 22, 2010

Next Up: The No-Jobs Bill was originally featured on Whiskey and Gunpowder

Ron also introduced a subject I have been itching to discuss here for at least six months, bless him.

Strangely enough, given that paean, I’m going to begin by disagreeing with my new candidate for hero. He wrote, “We need to forget the causes of the earlier War Between the States, regional differences, slavery, tariffs and other related issues.”

No, no, dear man, we must not forget the causes of the First War of the Rebellion because we are still at odds over precisely the same issues. We still have very strong regional differences and an even larger one of city rats and illegals vs. country mice; slavery now comes in the form of wage and welfare plantation, tariffs are still a big issue (see my modest archived discussion of the nasty jump in the price of tires), and consider that now, as then, the root cause was a corrupt, big money-controlled Congress that had out-run what it could confiscate from the citizens easily. Two ways of solving the problem occurred to the in-crowd back then, the first being to declare that the western border of the US was the Mississippi River permanently and pluck those caged off at their leisure, while the second was to conquer and rape the Southern states which were the wealthy area at that time.

No contest.

A population-dense industrial nation expected to find the less-populated agrarian portion of the nation far easier pickings than they turned out to be, a mistake Washington continues to make in backwaters ranging from Viet Nam to Afghanistan.

Slavery was being phased out as quickly as was feasible primarily because slaves are the most expensive–and least productive–form of labor, and let us not forget that all of the slavers were Yankees, who not only had virtually all the shipping but a great many slaves themselves. Yankees are the ones who came up with a solution to King Cotton’s demand for employees; we didn’t like it, but we had no alternative; everybody down here was already working. Lincoln’s (in)famous “Emancipation Proclamation” didn’t free a single slave in Yankee-held territory and it didn’t free any in the South at the time, either. I am not a fan of the original Illinois politico (or any of his successors), and Lincoln used the slavery issue cynically for emotional effect and spin. READ his opinion of blacks; it is well documented. (Ronald and Donald Kennedy’s The South Was Right is meticulously documented and official correspondence between Lincoln and his generals will turn your stomachs. Their idea, carried out brilliantly in war efforts and “Reconstruction” was to beat the South so far into submission that it would never recover. They were quite successful.) Ah, yesss, the Rothschilds and similar friends have made out well for centuries by funding both sides of wars while Krupps et al. provided munitions to both combatants and both stirred up conflict. That’s why I suggested investing in “defense” stocks in “Juggling Act.”

There is, indeed, a large and growing feeling that fiscal and cultural sanity can be regained only by going our separate ways. North Carolina has a vigorous movement, as do other South’n states and the Montana-Idaho-Wyoming-Utah area, and even Hawaii wants Liliuokalani’s throne and Iolani Palace back. (Chuckle…I say give it to ‘em. An island kingdom 5,000 miles from anywhere that has been firmly under the control of Democrats and the Japanese for half a century is something we need to support about as much as we do southern California.)

There is a very easy, obvious solution to getting the ball rolling, and if there is anything we have an amplitude of at present it is snow, literally and figuratively.

We start with the Republic of Texas.

Pay close attention now, because the facts I am going to give you–and they are facts–are not in any of the history books the winners have written for 150 years. Gentle smile…sounds like a good anniversary to celebrate, to me. Quite a few states would like the simple no-fault divorce the South asked for last time, but Texas has an advantage. We’ve only been living in sin all these years. That’s right: we weren’t married, or, to stop being colorful, Texas has never been a legal part of “those United States.”

1. The Republic of Texas is not, has never been, and could never have been admitted legally to the USA. There is no provision in the Constitution for annexing or admitting another nation. True, there was an unconstitutional Bill drafted to do so, but it has been buried in committee for many a long decade and had a time clause in it. No one has ever dared bring it out for obvious political reasons.

2. Our flag does not fly at the same height as that of the US in recognition of the fact that we “were” once a sovereign nation or to advertise a failing amusement park, Six Flags Over Texas, but because we are still one, albeit under occupation since about six months after the rest of the South submitted. (I started to replace “one” with a more precise “sovereign nation,” but realized that our capitol, Austin, is also a failing amusement park. And we still went into the present deepening depression last and have felt the effects least.)

3. Our current Capitol building was constructed in 1939, and in the Great Rotunda is an enormous, splendid marble and brass mosaic that proclaims proudly “The Republic of Texas.” Once again, that wasn’t “history,” it is how a lot of us see the matter. Confederate General Albert Sydney Johnston reposes in the adjoining cemetery. That was when what you think of as the “Texas” flag was foisted upon us. The true Republic of Texas flag, the Burnett, a single golden star on a field of blue, flies in front of the ranch house and quite a few other places. I don’t tilt at windmills or I would prepare a brochure to hand yahoos who fly the US flag above the false flag on a single pole.

Hopeful look. Is anyone expostulating, “Now, Mrs. Traynham, all of that was long ago and isn’t relevant?”

How relevant are treaties–nations deal with each other by treaty, as you should have learned in Civics classes, if those are still taught–between the Republic of Texas and the US? How relevant is the decision of a Federal Judge? He takes himself pretty seriously and as far as I know he is still behind the bench over in West Texas. Is 2004 recent enough for you?! Yes, indeed, you may not have heard about it through the MSM, but in this century that splendid gentleman ordered the Feds “to cease and desist hostilities against the land and people of the Republic of Texas.” The Washington gang didn’t do it–regulations and taxes being very hostile, indeed, to say nothing of troops quartered on our soil–but they went back to D. C. a very unhappy bunch.

Some of you have read my remarks about the project I was engaged upon when I realized we had better shelve it because my analysis said that we were going to have either The Greater Depression or dictatorship before we completed the last two steps (three, if you count a wide-spread education effort) to free our nation. The RoT was it. I had reached the point of preparing a packet for volunteers covering the twenty top concerns of most citizens, and in every instance the answer is “Restore the Republic.” If it will amuse you, send me your question on how an independent Republic of Texas operating under a real, unsullied Constitution would improve the lives of all those who are honest, law-abiding, hard-working, and oppressed under current conditions.

Take heart, America, in how close we are. ALL that need be done is a Resolution from the Legislature calling for a public vote on the matter, and to conduct that vote. If we have a successful outcome Texas will cease to be a “for profit corporation” subsidiary to the for profit corporation known as the federal government. (Look them up in Dun & Bradstreet, along with the Federal Reserve.) We will revert instantly to the 1837 Constitution which has been updated very slightly and quite legally to allow suffrage for females and non-whites. Well over a hundred taxes and millions of pages of regulations will be rendered null and void immediately. (One slight problem is to keep the first Legislature elected and sworn in from restoring a bunch of in-crowd regulations wholesale and thoughtlessly. See Tex Norton’s upcoming article on how and why regulations are promulgated.)

The new President–who will not be the current governor unless he or she runs for that position and wins–will have a mansion and a salary of $10,000/year! The cream of the jest is that the new Legislature cannot raise salaries effective during their terms of office. We’ve got good stuff in our Constitution. For another example, it says simply that we have to come up with a plan to educate children, and it doesn’t say a thing about forbidding prayer or teaching fifth- graders the joys of sex. I’ve got a great plan for educating the children; I figure I can volunteer to be Secretary of Education and have all half dozen choices parents will have up and running in two weeks, at which point I will resign. No salary, no staff, set it up and let it work from home-schooling to on-line schooling to private schools to smiling sweetly and telling local neighborhoods that if they want traditional “free” neighborhood schools, by all means fund them out of their personal budgets no longer subject to income tax, sales tax, gasoline taxes, cigarette taxes, or property taxes. Nothing in life is free, people.

We have just a few possibilities for President that a lot of Texans (or “Texians,” in ancient parlance) might be excited about, including Dr. Ron Paul and a conservative writer who has a ranch not far from mine, a fellow named Chuck Norris. It could be that Ross Perot could make a comeback, I suppose…

If you look at the Red vs. Blue map you will discover–no surprise–that the Bluebellies hold the major cities and the area which has been invaded by Mexicans. The Red has everything else. Yes, we tend to vote Democrat but that is ancient rebellion against “the party of Lincoln.” In all save the big cities we’re a conservative, old-fashioned, pretty self-sufficient bunch. When I was a girl we called ourselves “conservative states-rights Democrats” rather than Republicans to differentiate ourselves from the “Progressives.”

We have a year before the next Legislature meets, and a useful pastime will be seeking candidates who are receptive to the notion of disentangling ourselves from an arrogant, oppressive government (two of them, actually), and starting over. Reclaiming our freedom is do-able. If I hadn’t thought so I wouldn’t have spent over a year working out details.

If we gain our independence again Texas will become, overnight, the ninth richest country in the world. Not only can we claim a 200-mile limit for oil exploration through international law, but we have a Supreme Court Decision that says the same thing–and the railroad commission controls such funds with schools having first call. There will be lots left over. We have deep water ports and nuclear facilities, tourism, wineries, and many miles of golden corn we won’t turn into Ethanol. We have plenty of gas and sweet, light crude left; the problem at present is Greenie legislation and transportation to refineries, which we also have. Texas has far more than our “fair share” of small farms and ranches, major universities, superb medical and vetinerary schools, and our own distinctive culture. There isn’t any good way for the US to pack up a few handy airbases when we toss their minions over our borders with jovial civility. We have the only independent power grid and several vast wind farms. We even have salt domes which hold “strategic reserves,” although my numerous oil friends tell me that it will be a miracle if 25% of the contents can be recovered, and Washington can try suing us in our courts if it wants first dibs on them.

Courts? Our Constitution calls for a series of common law courts. To simplify, all that is needed to try most cases is an elected Judge/Justice, half a dozen citizens gathered at random, no lawyers allowed, and the decision of the Jury is final. No lengthy waits, no incessant appeals…and one of my bright little ideas is that we outsource prisons for anything more complicated than sleeping it off over night in the drunk tank to Mexico. This would be extraordinarily cost-effective (not that the Republic of Texas Constitution calls for coddling criminals and terrorists, and it certainly does not mandate “Miranda” warnings), and most instructive. Mexican jails are exceptionally unpleasant places, that being the point of incarceration. Recidivism rates for the survivors should be very low; in addition being sentenced for crimes of violence will carry automatic revocation of citizenship if some of us persuade the rest. Let those who are inclined moan over lousy childhoods and evil companions elsewhere because real Texans believe we are responsible for our own actions. Golly…that would mean we didn’t need parole boards or parole officers, either, further reducing the payroll…and our stance will be that Social Security checks–but not taxes–will be enforceable contracts between the US and citizens of the Republic of Texas. Our Constitution calls specifically for minting our own gold and silver money–and the first serious country to revert to the gold standard will have a commanding role in world politics. Everything that needs doing can be funded handily by a 15% tax on non-resident corporations and a 10% tax for two years on those who apply for citizenship.

The breakup of any long-term relationship is at best painful and expensive. At worst it is messy and violent. The advantage the North held last time in terms of armaments was nothing compared to the current disparity between citizens and governments the Founding Fathers dreaded would come to be. Last time, until “we” had access to arms captured on the field of battle, fortunate Southerners used the accurate sniper rifles made by Whitworth, in England, while Lincoln had the precursor to the Winchester, went to the trials for the Spencer repeating rifle and got it into the field, as well as the Colt revolving rifle, Sharps made his sniper guns, and he had Dahlgreens and Parrot to cast canons. A descendant of Dahlgreens’ technology of exterior banding to strengthen barrels is in use currently. Texas is at the same apparent disadvantage multiplied many times.

Think long and well, fellow citizens, before deciding that we cannot, in conscience and in self-preservation, do other than echo Patrick Henry. IS life so dear and peace so sweet as to be purchased at the price of chains and slavery? Forbid it, Almighty God!

Those are the words which preceded “As for me, give me liberty or give me death.” It is highly unlikely that Pharoah will let the people go in peace this time, either. It is certain that should hostilities develop once again those who do not care one way or the other will be caught in the middle. Yes, I agree with Mr. Holland that secession is the most efficient way out of the fiat currency mess and many others, but I cannot see it as an “easy” way out. I must point out as calmly as one can say such a thing that a government which staged the tragedy at Waco under the code name “Operation Showboat” might well not eschew a homegrown version of Tienamen Square if it feels threatened.

Despite the strictures of Janet Napolitano and her ilk I do not regard myself as a Bible-thumping, gun-toting domestic terrorist. I love my country and I love our heritage. A primary reason I write is because those of us who can see most clearly what American can be do so from firm grounding in what America was. If left to my own devices I would raise cattle and goats, be happy, and do private charitable good works. All I have ever asked is laissez faire and common sense.

A diplomatic solution is at hand; all the Feds have to do is abide by the court order while we have our vote unsupervised and we will all see whether ending our version of apartheid could be a rousing success. There are at least face-saving legal grounds for acquiescing while Texas and Hawaii strike out on their own. Perhaps, given a fair vote, the preponderance of citizens will come down on the side of enormous, intrusive government. A lot of us have the nerve to put the issue to a test.

Still, I fear that the growing call for secession is on the order of nuclear deterrence, which thus far has deterred nothing but nuclear wars. Heavy sigh…we’re talking about a different sort of nuclear fission, the desire of the nucleus to throw off the useless atoms which have attached themselves to our core principles. I’m no Neville Chamberlain, but the wrath of those who hold the US Constitution prisoner must be taken seriously. That is a question for individuals, whether or not “we hold these truths to be self-evident.”

Sober regards,
Linda Brady Traynham

February 18, 2010

The New Secessionists was originally featured on Whiskey and Gunpowder

It was as enthralling as Dr. Zawi Hawass opening the empty tomb, without the good doctor’s charm.

We already knew about the 20% enrichment capability, and 20% is a long way from what it takes to make enriched, satisfying noises and distinctive cloud formations. At present–again, “at present”–the celebration is precisely what I expected: a big fizzle which holds us as riveted as a speech by Castro, Chavez, or Obama.

We can read this one of three ways: that the A-man took himself seriously and is going to be so embarrassed by world opinion that he lashes out from vanity…or that he was just messing with our heads seeing if he could provoke an attack or disarm us mentally…or he’ll fling warheads around next week, once we’ve lowered our guard.

How many nukes would this chucklehead chuck if Ahmadinejad could chuck nukes? Probably all he had. How very frustrating not (apparently) to have enough to hit the Great Satan and Israel simultaneously. I’ll offer him a piece of advice, though: when you get the nerve and the hardware simultaneously, Mr. Ahmadinejad, strike the USA and the Vatican. It will be a great deal safer than thinking you can knock out all Israel will throw at you given a good excuse.

Israel already has ample reason.

Israel has more than that, beginning with a strong sense of survival and a solid year of Obama and Hillary siding with their (Israel’s) enemies. One of the few constraints on Israel for decades has been abiding by the wishes of its closest ally, Heaven help it. Time and again all outside parties including supposed allies have demanded that Isael act to its tactical and economic disadvantage. Give back territory I won fair and square when the other side attacked?! I think not. Give up part of my nation in an attempt to appease enemies? Nonsense. Restrict family growth in favor of Hamas, which is already being given millions by Clintonista, Congress, and Obama? Not in this lifetime, if I were in control, and I’m not even Jewish nor have I lived in combat conditions all my life. I wouldn’t even worry about collateral damage if my nation were attacked by ground forces and we flung the invaders back over their borders for a loss of ten. Football is our national game, and if we have to retake Pork Chop Hill several times we will. I think the Israelis are tougher than we are, and they are certainly playing on a much smaller field.

Yes, Netanyahu has a precarious coalition, but I’m moderately certain that the appeasement crowd isn’t a gaggle of cowards, just misguided; there is no diplomatic solution to the problem and never has been. Anyone expecting another Masada would be wise to find a bunker-buster-proof cave. For nearly sixty-five years Israelis have protected their tiny toehold. Every citizen is a soldier, and if we had any sense we’d be importing them (even chosen at random) as security experts. In my quaint hawkish way I think it is long past time to consider how much further it is safe to back Israel into untenable corners. It could just be that the Germans weren’t the only ones who ever considered lebensraum.

A big hunk of Jordan is part of historical Israel, and I have roundabout reason to suppose that the King of Jordan has long considered the possibility that Israel might, ah, “request” a bunch of it back. My husband was an advisor to the King for a while, and John remained vehemently anti-Israeli until his death. Of course I never questioned him about his military activities, and he certainly never told me one single thing I shouldn’t know. John was as cerebral and practical as they come, and I have never supposed that he was captivated by the hospitality his host showed and the friendliness of the population. My purely amateur conclusion is that Jordan frets frequently about what Israel may do and the effect that would have on tourism and the throne.

The Pentagon may have intended for the cessation of win-hold-win to be a threat to Congress over budget cuts, but possibly some country less aware politically might conclude that Iraq and Afghanistan count as the one war per customer and it is safe to try a little encroachment elsewhere. What do we do if Lebanon, Syria, Jordan, and/or Egypt decide to go play alongside the Palestinians? Say, “Sorry, we’re committed to only fighting one war at a time?” Respond, “In this rare instance we’ll make an exception” or pull all our troops out of Iraq and Afghanistan? No good can come from the Generals, Congress, and the President telling the world that we are tapped out financially and militarily.

Metals are up strongly and the DOW was up a tepid hundred the last time I looked which may reflect an attitude of, “Thank goodness that threat is over and we can get back to business as usual.” If so, the market reaction is a very short-sighted attitude. All calm today means is that thus far Amahdinejad did not strike at the “arrogant” West. I’m more inclined to think all four metals I track being up is indicative of a feeling that just because this firecracker fizzled doesn’t mean we shouldn’t pay attention.

We need to go find our version of Krupp to follow, I think. We can’t just track Remington, Winchester, and Federal because of the run on sporting- and hand guns and ammo for the last eighteen months. A contact on the West coast was pleased to be able to pick up a hundred rounds recently, the shortage is that bad. To those who don’t shoot a hundred rounds of nine mil or a “brick” of 500 .22 shells probably sounds like a lifetime supply or enough to stage your own version of Waco, but it really isn’t. Four friends plinking at targets could go through that amount in less than half an hour.

What we want to know is how those making NATO rounds (which can be fired using an assortment of long guns) and tanks are doing. With the increasing number of “preppers” even the MRE isn’t a good measure of military preparedness any more…General Dynamics is almost certainly a good tell-tale. Maybe chart just the Friday close on Martin Marietta, DuPont, and Bell Helicopter?

MDC suggests the turbine engines used in helicopters, tanks, and other widgets made by Lycoming–which may be affiliated with Bell, now–could prove interesting. Avco, Vickers, Pantex, BSA, maybe keep an eye on exports from Israeli Arms…they hold the patents on Uzi and the practice rounds for 120mm, 30mm armor piercing, interesting things like that. Krupp, which has been in business since the 1500s, is still manufacturing munitions and chemicals and has introduced a 17.5 cm weapon recently. I didn’t put Krupp at the top of the list because investments overseas might be a little dicey if we end up in WWIII.

Signature chuckle…you don’t expect sweet little old ladies to while away rainy afternoons attempting to work out a reasonable equivalent of Krupp as an investment, do you? There are always wars somewhere, and the Keynesian solution when all else fails is a great big war. The possibility of WWIII as a solution to the crash of the dollar…or the Chinese economy…or even Japan has been bruited about. The Middle East is a perennial running sore but it isn’t the only danger. The stakes went up when the Pentagon announced the end of the philosophy of attempting to fight two wars simultaneously, known as “win-hold-win.” Anything which causes our numerous enemies to doubt our will or our ability to wage war increases the chances of conflict.

The premise for over half a century has been that the “military-industrial complex” foments war for economic gain. We’re always interested in economic gain, although we’d prefer ours to come from a new extraction method for shale oil or foreseeing that we should get out of buggy whips and in to pneumatic tires, or short whale oil and go long LPG. I don’t buy stocks on “hunches,” but I definitely believe in investigating sectors for potential growth or signals of future events on internal nudges. So…don’t count “I’m a dinner jacket” out because he didn’t cause a gruesome mess today, but start thinking like a merchant of death far afield. If you had influence and reason to believe widespread, long-term hostilities were on the docket, what would you invest in and what would you collect?

Remember what was in short supply and/or rationed during WWII: tires, gasoline, butter, clothing, meat, cooking oil…tires would be a good bet again because they aren’t made out of rubber from Malaysia any more. Worse, they are made out of oil, and most of them are made overseas. China just might not be on our side during WWIII. We Americans have a good stockpile of automobiles if the factories are converted again to produce automatic weapons, but if you might consider picking up a set of the things that need replacing periodically, such as points, plugs, condensers, filters, belts, hoses, engine oil, power steering fluid, starter, alternator, and so forth. If we’re thinking of investments, I might talk myself into some Good Year, etc., particularly since the most popular sizes of tires more than doubled in price following Obama’s imposition of an enormous tariff.

Interesting, isn’t it, how what we want for our own personal use is probably what the nation will need if we conscript grannies and teenagers to fight an even bigger war? Shades of “What’s good for General Bullmoose is good for the country.”

Regards,
Linda Brady Traynham

February 17, 2010

Juggling Act was originally featured on Whiskey and Gunpowder

In this specific case, Henry Waxman (D-CA), Chairman of the House Energy Committee, has acknowledged that the largest US insurance company, State Farm, alerted federal safety regulators on “numerous occasions” beginning three (3) years ago that there were reports of unexpected acceleration problems in Toyotas. Now that the “horse has been stolen,’ Mr. Waxman is attempting to lock-the-barn by requesting that the five (5) largest US insurance companies submit any reports the various insurers sent to the safety regulators as well as any e-mails they received from those regulators.

And so now the backpedaling begins. Oh we “pushed Toyota from the beginning” to address US safety concerns said the National Highway Traffic Safety Administration (NHTSA) division of the US Department of Transportation. Why they even sent some top NHTSA officials to Japan to brief 100 Toyota engineers and executives – last December. Let’s see, State Farm notified the NHTSA in 2007 that there was a “problem” so the NHTSA acted “quickly” to send top officials in December, 2009. Wow. Can’t get much quicker response than that, can you? Really holding Toyota’s feet-to-the-fire! I feel safer already, and I don’t even own a Toyota. (Editor’s note: Tex restores classic cars, and it was touch-and-go whether I should leave his dead body and take a black ‘57 Thunderbird that would have had the Fonz doing the Snoopy Dinner Dance when visiting his secluded lake house. Suffice it to say the beautiful beast has been on the cover of at least one international magazine.)

Of course this is just an isolated incident, right? Not exactly. Recall the Firestone tire problems of a few years ago? Even though the NHTSA was required by law to begin publishing information on serious vehicle accidents, the agency managed to delay the publication for five (5) years! Excuse? “The NHTSA had to withhold that critical information due to pressure from manufacturers.” So the inmates are still in charge of the asylum?

There are numerous other examples of the failures at the NHTSA but why pick-on just them? There are plenty of other examples. Bernie Madoff comes to mind. It only took our fearless protectors 20 years to “catch” Bernie. The “regulators” in this case had been notified at least 10 years earlier that something was fishy with the Madoff operation. But good ole Bernie was a big dog on Wall Street so he couldn’t be doing something wrong, could he? The same SEC that was responsible for catching Bernie was also responsible for supervising the various investment banks. Yet somehow Bear Stearns and Lehman Brothers must just have fallen through the cracks. We note with appreciation that the insurance regulators were right on top of AIG, keeping them honest and above-board. Our banking regulators certainly didn’t let Countrywide get out of hand. Merrill Lynch found “cover” at Bank of America but now BofA is back in the suspect limelight. Lest you think it’s all financial-related, note the Food “Safety” Act now protects us at the expense of small farmers but offers wondrous support for big Agribusiness. Wonder how that happened? Goldman Sachs pulled the best stunt of all by getting “their man” into top politics in Washington so as to blunt any questions, let alone losses, that might be attributable to them. Hey, if you don’t have friends in high places, you don’t have squat.

I don’t see any pattern here, do you? These are all just “isolated” cases, right? No need for alarm. Pay no attention to the man behind the curtain. Just keep moving along, folks. Nothing to see here.

As Lee Iaccoca would ask “Am I the only guy here that is angry?” Where is the outrage? Have we become so used to government corruption and incompetence that we no-longer even react to these atrocities? Why do we seem to demand perfection from our corporations and not from our government agencies? Why are government-types not held to at least an equal standard to that of business? Why is there no demand for responsible execution of government duties? Why don’t government-types get fired for not doing their jobs?”

We keep coming back to the same answers regardless of the questions or atrocities that occur in our government. Public “ownership” means virtually no ownership. No one is responsible. No one takes or accepts responsibility. Only in the private sector is there a sense of responsibility. Only in private industry does performance count.

We’ve all visited national parks as well as private parks. By that I mean such places as Grand Canyon and, say Disneyland. When I visit a national park, I’m appalled at the trash and filth. When I visit Disneyland, I’m impressed with the cleanliness. That’s a perfect example of public ownership, meaning no one takes responsibility versus private ownership where the very survival of the business depends upon pleasing the customer.

Isn’t hiring a private security guard very similar to hiring someone at the SEC or at the NHTSA or at the FDA or at any government watchdog agency? If the private security guard fails to perform, that person is fired. If someone at the SEC, NHTSA or FDA fails to perform, the Department budget is doubled and many more bureaucrats are hired to “fix” the problem. In government, the problem not only never gets “fixed,” the problem gets worse and the costs skyrocket. So if Mr. Waxman is really serious about getting to the bottom of the latest scandal at the NHTSA, he knows where to look – right behind him.

But of course Waxman really isn’t interested in solving the problem. He’ll go through the motions of making the electorate think he’s on top of things, but the end result will be to simply white-wash the underlying problems. Then it’s on with government business as usual. Toyota will, because in the long run their goal is to survive by making profits, actually fix their current problems. Please note Toyota will do this regardless of what the government “regulators” do or say.

Which begs the question: Why do we need government regulations? If the regulators don’t do their jobs; if they are either unresponsive or slow-to-respond, who needs them? Then who would protect us, you ask? Who is protecting us now?, I ask. Haven’t we just observed that the very folks we rely upon to protect us – don’t?

The government has become the master Pied Piper. While we slept so peacefully, forces at work behind the curtain bamboozled us into believing that they had our backs; that we were being protected even as we slept. Yet once again, we’ve been awakened to facts that they aren’t doing their job. Have they ever really done their jobs? Isn’t what passes for regulation by governments just a myth?

I’ll go a step further. Not only is it a myth, it’s a con-game of the highest order. What do regulators do on a regular basis that is observable? Give up? They formulate rules and regulations, don’t they? And then they impose those rules and regs on the voters under the guise that these requirements will protect the public. But let’s once again look behind the curtain.

In a former life, I had almost every securities and insurance license known to man; at least a man living and working in the United States. Would you suppose I studied for and passed all those exams because I had nothing better to do? Or would you correctly surmise that I submitted to that indignity because that was what was required for me to be able to work in the securities and insurance industries? Who came up with these tests as being a requirement for employment in these industries? Government? You’re temped to respond “How else would your customers know that you were competent to do your job if government didn’t supervise you?” But haven’t we just been discussing that the government regulators really haven’t been doing their jobs? So once again, why did I have to take and pass all those exams?

Ah, now we’re starting to “follow-the-money!” Name a profession: Doctors, Lawyers, Engineers, Stock Brokers, Insurance Agents, Investment Advisors, hair dressers, butchers, the list is almost endless. Question: What do all these assorted professions have in common? Answer: required licenses to practice those professions. You couldn’t let just anybody practice medicine, could you? Doesn’t that person have to have a medical degree from an accredited school, not just any old school but an accredited school, before being allowed to practice medicine? Well, yes, but not for the reason you’d think. The ONLY reason the doctor is required to obtain a degree is because the medical profession (read medical CARTEL) has convinced the government that no one other than a degreed-person is competent to practice medicine. Why?

You’d be tempted to respond that attending an accredited medical school and graduating with an accredited degree is the only way to assure competence, correct? But if that is a true statement, why are there so many successful malpractice law suits against doctors? (Editor’s note: we must always remember that half of all doctors were graduated in the bottom halves of their classes, as well.) If the only qualified doctors are those that completed an approved medical school, how can the lawyers be successful in wining so many malpractice lawsuits? Gee, maybe just having the right degree and license to practice medicine isn’t the solution after all. But remember, we’re trying to follow the money here. So why would the doctors create such a barrier to entry into the medical profession?

Lesson from Economics 101: Law of supply and demand. If there is a large supply of a product or service, the price of that product or service is rather low. The fewer the available products or service providers, the higher the price of each. If you’re a doctor; or lawyer, engineer, stock broker, etc.; you really don’t want any more competition than absolutely necessary in order to maximize your income. You join with others to form a cartel to keep out the riff-raff. You make it difficult to join your fraternity of professionals. You create a high entry cost into your field of endeavor. You limit your competition.

You can safely apply this concept across the board. Think labor unions. You’re a carpenter. You want to earn as high a wage as possible. You join other similarly-minded carpenters and establish rules for membership. Any new kid that wants to join must jump through some rather tough hoops. You are able to effectively keep your membership low. You then petition government to require that all government projects be built only with union carpenters. Government grants your request because you represent a desirable voting bloc for them at the next election. Now equipped with your union and exclusive contract, you can dictate the labor cost for that project. No matter that non-union but highly skilled carpenters are willing to do the job for less. You’ve got a lock on the deal; no outsiders allowed. Now extrapolate this concept to all the other professions. Not so difficult now to follow the money, is it?

There is at least one more step in this progression. We started by questioning the need for government regulation considering the fact that the regulators never seem to act in a pro-active roll and are, at best, re-active. But they do make the “rules.” Enter our unions, whether they be doctors, lawyers or Indian chiefs. Someone has to formulate the rules promulgated by the regulators. Where do those rules come from? What is the source? Let’s continue to follow the money, shall we?

You’ve just formed your professional union to limit entry into your field of endeavor. Now you need to establish a coercive power to enforce your desires. What do you do? You lobby government to establish operating rules and regulations governing your business. But the government doesn’t have the foggiest clue as what you do, let alone what rules are appropriate. So in your most benevolent gesture of good will, you offer to write the rules and regs for the regulators. “How wonderful!” exclaim the regulators, since they haven’t got the slightest idea where to start. This way, they can continue to drink coffee, tell jokes and chase the secretaries around their offices while you prepare the rules and regulations that will give your group a monopoly in your specific industry. Then you continue by contributing heavily to the political party that permitted your establishment of this farce thereby assuring its permanence in our society.

See how the money flows? See why the regulators won’t do their jobs? See why this situation gets repeated a thousand times-over? See why this situation will never change until and unless we, the people, say “enough!”?

Cheers,
Tex Norton

February 16, 2010

Another Waxman Whitewash? was originally featured on Whiskey and Gunpowder

All of our lives being without the necessities of life has been something that happens in third world countries or temporarily to strangers in New Orleans. A trite but true observation is, “That was then, this is now.”  One of the things that “fell through the cracks” of the infamous “social safety net” and absurd regulations to make dirt clean enough to eat (something only Haitians do) is the ability to keep city streets clear and power on when Global Warming dumps five or so feet of white stuff on power lines and closes roads. I haven’t taken time to find out the conjectured reasons a power plant under construction blew up recently, but while that may not be attributable to snow eventually something will give way from the accumulation of weight. Snow is a lot heavier than it looks when falling to the ground so prettily. You will be horrified by how quickly your cozy seventy degree house can fall into the forties.
 
Some of us only need to be caught once in a situation–however unlikely–to take precautions ever after. It has been sixty years since we had the ice storm of the last century in Brazos County and were confined to the ranch for over a week. All roads to town were closed, power lines were down, Daddy hauled water from our artesian well daily using the tractor, and Mother cooked some pretty good meals in the fireplace. What really saved us was having two big diesel floor furnaces. When we moved to Kansas I already knew the drill: keep the larder and wood pile stacked high and don’t go outside until that stuff melts.
 
Signature chuckle…now that I count, four times in my life–five, if you count the tornado in Wichita in summer–I have been in situations where only the caution I had learned when I was ten kept my family safe and comfortable for the week it took to get the ravages of nature under reasonable control–and now we’re facing “man-made disasters,” too. On an average every twelve to fifteen years something has threatened to disturb the tenor of my life, and in every situation prior planning has prevented very unpleasant possibilities. In all of them other people died.
 
I’m kicking myself now because our “new” gas stove (1938 Wedgewood in mint condition!) has not been installed yet because the new kitchen hasn’t gotten that far. Our safety backup to central H/A at present is one big gas wall furnace for the bedroom wing and one fireplace…so it behooves me to go to town today and buy some stovepipe so that the two small wood-burning heaters can be put into service quickly if we lose power. ARE you aware that even your gas appliances may not work if they have electronic ignition? A sensible precaution for those of you in the snow zone, particularly, would be to go turn on one stove burner now and turn it down to simmer…although there was that time in Ft. Sill when the heads of the gas wells froze…The simple and very inexpensive act of being certain you can have gas heat at least in the kitchen may save your lives and will at the very least provide a lot of comfort if you all end up on sleeping bags and comforters scattered in front of the dishwasher, refrigerator, and sink. If you have gas logs light ‘em up now, cowboys. They’ll add quite a bit of cheer. At the very least go pull all the circuit breakers and find out which gas appliances work when there is no power. My darling Charles adds that many such things have a thermocouple which must be heated and to pick up one of the long gas “matches” used with fireplaces and grills.
 
When the chips and the power grid are down you, your mind, and the precautions you have taken are all that stand between you and at least misery–and quite possibly death. Half the year disasters lead to rigor mortis from extreme heat or cold. Your all-electric MacMansion isn’t the refuge you probably thought it was.
 
Take advantage of your snow days to improve your chances of survival even in the “best” of times. Right now sustainable heat and supplies of food are most urgent, but I wouldn’t take water for granted, either. Go fill the bathtub in the third bathroom and all of the empty milk jugs (SURELY you save those for times of need?) and big pots you have. You can always use the water later for something else–and no, you cannot melt snow efficiently. Mountain climbers and Artic explorers learned long ago that the heat necessary to produce much water is inordinate.
 
Use this break in your work routine to inventory what you have and monitor consumption. How are you fixed for candles, fire logs, a Coleman lantern and stove (and fuel), matches, and even hot cocoa mix and marshmallows? Have you put off refilling the prescriptions that are low? Whatever your idea of the indispensible is, other than the ability to keep yourself and the hound puppies fed, warm, and watered, do you have it?
 
I hate to be dreary, far less a bore, but in time the snow will melt and the death toll will be tabulated. Going on past experience, a lot of people will die in the next few days because they went their happy grasshopper ways. Don’t let it happen to any of you, please. If the only way to get to the nearest grocery store is put on your pony skin boots with the Ho Chi Minh treads and pull your child’s sled, please go now. Don’t count yourselves “safe” unless you know that you can survive at least five days without electricity or resupply of anything including reading material. You Shooters are too dear to me not to nag you to do what is sensible even if it isn’t convenient.
 
Please?
 
Regards,
Linda Brady Traynham

February 11, 2010

“Wouldn’t You Like to Be a Prepper, Too?” was originally featured on Whiskey and Gunpowder